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Foreign Bank in Healthy Shape Above Prior Base and 50 DMA - Friday, June 06, 2008
Healthy stocks that are within close striking distance of new highs are often great buy candidates for investors to keep on their watch lists, especially when the companies match favorably with all of the investment system's criteria. When a stock is more than -10% off its 52-week high, and if it has violated its 50-day moving average (DMA) line, then the outlook only gets worse and worse as it spends a greater period of time trading deeper under that important short-term average line. By the time a stock's 50 DMA line starts sloping downward it should also be acknowledged that the stock has been struggling for a long while, in which case it might be time to reduce exposure and look for places to put that money to work in stronger buy candidates.
Credicorp Ltd. (BAP -$2.16 or -2.67% to $83.11) ended with a loss on light volume. BAP sports strong ranks; its Earnings Per Share (EPS) rating is 98 and Relative Strength (RS) rating is 91. This stock was recently featured on Thursday, May 8, 2008 in the CANSLIM.net Mid Day Breakouts Report (read here) with a $80.49 pivot point (which it had recently cleared) and a $84.51 maximum buy price and the following note: "Y - Reported solid earnings news but suffered an analyst downgrade and gapped down today, dipping under prior chart highs in the $80 area before rebounding. Recently featured in 4/24/08 CANSLIM.net Mid-Day BreakOuts Report (read here). Based on weak technical action it was previously dropped from the Featured Stocks list 1/25/08. It held up well above its 200 DMA line and repaired the recent technical damage with a gap up on 4/01/08 above its 50 DMA line. It was previously featured in the 12/12/07 CANSLIM.net Mid-Day BreakOuts Report (read here). Earnings and sales growth has been strong in the past 4 quarters and on an annual basis (good C and A criteria)."
As long as it continues consolidating above its 50 DMA and prior chart highs it remains in healthy shape and may deserve the benfit of the doubt. Disciplined investors stick to buying stocks within the investment system's guidelines and remember to always limit losses per the 7-8% sell rule.
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New Highs After Light Volume Gains Today - Monday, January 14, 2008
Volume is a vital component of technical analysis. Prudent investors that incorporate volume into their stock analysis have often benefited several fold. Ideally, healthy stocks will more often tend to rise on higher volume and pullback on lighter volume. Volume is a great proxy for institutional sponsorship. Conversely, high volume declines can be ominous, as this usually signals distribution and further price deterioration are more likely to follow.
Credicorp Ltd. (BAP UP $3.39 or 4.41% to $80.25) rallied to a fresh all-time high on Monday, yet volume failed to meet the necessary level needed to trigger another technical buy signal. This stock was recently featured on Wednesday, December 12, 2007 in the CANSLIM.net Mid Day Breakouts Report (read here) with a $77.86 pivot point and a $81.86 maximum buy price. Two days later, on December 14, 2007 the stock triggered a technical buy signal with gains backed by a sufficient volume increase. Additional gains on heavy volume on December 18th, 2007 helped it hit a new all-time high. Since then it has steadily consolidated above its 50-day moving average (DMA) line; meanwhile the broader market went into a steep correction, hurting all stocks' chances of making headway.
The company sports a very strong Earnings Per Share (EPS) rating of 97. It is also encouraging to see the company earn a healthy Relative Strength (RS) rating of 96. The company has managed to increase its earnings by well over the +25% guideline in each of the past four quarterly comparisons versus the year earlier. Concerns would be raised by any weakness leading to a close under its prior chart highs or 50-day moving average (DMA) line, as such losses would effectively negate its latest breakout. Always limit losses per the 7-8% sell rule, and never hold a stock if it falls more than that much from your purchase price. Remember that since the market is currently in a correction, and 3 out of 4 stocks follow the overall market, new buying efforts are not appropriate under the guidelines until a proper follow-through day emerges. Instead, BAP is a great example of a strong stock that should remain on an active watch list.
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